Largo Resources Kursrakete
SPECULATIVE BUY
(LGO - TSXV C$0.58)
12-mo. Target Price: C$1.75
Market Capitalization (Basic): C$66.8 Million
Risk Profile: SPECULATIVE
Potential ROR: 202%
Largo Resources Secures Off-Take Agreement
Event
Largo Resources and Glencore International have inked an off-take agreement for the Maracas vanadium project in Brazil. Glencore is one of the world's largest suppliers of a wide range of commodities and raw materials to industrial consumers including aluminium, zinc, copper, lead, ferroalloys, nickel, coal, oil and agricultural products.
Noble alloys, such as vanadium pentoxide and ferrovanadium, are used as hardening elements in the production of carbon and special steels. Glencore or its subsidiaries supply major steel mills in Europe, Asia and the United States.
The off-take agreement between Largo and Glencore covers all vanadium produced at Maracas for the first six years of commercial production with a renewable option for a further six years.
Details of the specific pricing agreement are confidential and have not been released. What we can say is that the deal is based on a discount to the spot ferrovanadium price. We have produced two tables to show how Largo’s NAVPS changes for different ferrovanadium prices. The current spot price is $US 62/kg.
Analysis
This announcement is an important milestone. Largo has secured a market for at least six years of its vanadium production and can move forward with development of the Maracas deposit. Largo anticipates the production of 5,000 tonnes of ferrovanadium per year starting in 2010. Start-up capital costs are estimated at US$126 million.
Long-term average price expectations for ferrovanadium are $23/kg through 2017. The current price for ferrovanadium is $62/kg. It is important to note that Largo's expected costs are anticipated to be less than $10/kg for ferrovanadium. At current ferrovanadium prices, discounting taxes and CAPEX costs and additional revenue from iron pellets, Largo would net $52/kg of ferrovanadium produced.
The following sensitivity tables outline the variation in our NAVPS7% for the Maracas project in terms of a selection of ferrovanadium prices:
Exhibit 1 - Maracas NAVPS Sensitivity to Ferrovanadium Price at Current Levels
Price
NAVPS
Spot Price
$60.00
$8.60
5% discount to spot
$57.00
$8.03
7% discount to spot
$55.80
$7.80
10% discount to spot
$54.00
$7.46
12% discount to spot
$52.80
$7.23
15% discount to spot
$51.00
$6.89
* NAVPS calculated as per initiating report using 7% discount rate
Source: Fraser Mackenzie estimates
Exhibit 2 - Maracas NAVPS Sensitivity to Ferrovanadium Price at Long-Term Levels
Price
NAVPS
Spot Price
$23.00
$1.59
5% discount to spot
$21.85
$1.38
7% discount to spot
$21.40
$1.29
10% discount to spot
$20.70
$1.16
12% discount to spot
$20.20
$1.07
15% discount to spot
$19.50
$0.94
* NAVPS calculated as per initiating report using 7% discount rate
Source: Fraser Mackenzie estimates
Our NAVPS is based on a 7% discount rate, assuming a fully financed and fully diluted share structure for the Maracas project alone and does not include Largo’s Northern Dancer project. We have assumed Largo will finance Maracas on a 75:25 Debt to Equity basis at an average share price of $1.00.
Our base case model on Maracas is predicated on a conservative long-term price forecast of $23/kg of ferrovanadium. As illustrated in Table 2, a ± 10% change in ferrovanadium price would result in a ± $0.44 change in the NAVPS7%.
If we assume Largo and Glencore have arranged a 10% discount on the spot price of ferrovanadium as an off-take agreement, by applying a spot price of $23/kg of ferrovanadium the chart indicates that Largo’s NAVPS7% for the Maracas project works out to $1.16.
If we assume a higher spot price of $60/kg, closer to the current spot price of ferrovanadium, and a 10% discount our analysis shown in Table 1 suggests the NAVPS7% for the Maracas would be $7.46.
Since Vanadium is a key additive in hardening steel, the driving factor behind vanadium prices will be a strong steel market. If the growth rate and demand profile for high strength steel remains robust, and supply remains tight, as experts predict, continued strong ferrovanadium prices will increase the value of Largo’s Maracas project.
Conclusions
The stock is currently trading around $0.60 which is a significant discount to our stand alone NAVPS7% of $1.59. The Off-take agreement cements Maracas’ position in the ferrovanadium market and reduces the level of investor risk and ultimately supports our investment thesis.
When the NAVPS7% of the Northern Dancer project and the risk-adjusted upside exploration potential are added to the equation on a fully diluted fully financed basis we reach our current target price of $1.75. We reiterate our SPECULATIVE BUY rating and our $1.75 target price.
Thomas Schuster – 604-609-6166 - tschuster@frasermackenzie.com
Andrew Edelberg – 416-995-4777 x239 - aedelberg@frasermackenzie.com
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TORONTO, ONTARIO--(Marketwire - May 26, 2008) -
NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRE SERVICES
Largo Resources Ltd. (TSX VENTURE:LGO)("Largo or the "Company") is pleased to announce that it has agreed to the pricing for its previously announced private placement of units (the "Offering"). Cormark Securities Inc. is lead agent on behalf of a syndicate of agents comprised of Fraser Mackenzie Limited, Macquarie Capital Markets Canada Ltd. and Clarus Securities Inc. (collectively, the "Agents").
The Offering will consist of 20,000,000 units ("Units) at a price of $0.50 per Unit (the "Offering Price"). Each Unit will consist of one common share in the capital of the Company and one half of one common share purchase warrant. Each whole warrant shall entitle the holder thereof to purchase one common Share for a period of 12 months following the closing date at a price of $0.75 per share.
Largo has also granted the Agents an option to increase the Offering by up to an additional 3,000,000 Units at the Offering Price. The Agent's option is exercisable at any time up to two business days prior to closing.
Closing of the Offering is anticipated to occur on or before June 12, 2008 and is subject to receipt of applicable regulatory approvals including approval of the TSX Venture Exchange.
The common shares and common shares issuable upon exercise of the warrants will be subject to resale restrictions for a period of four months plus one day from the closing date. The Agents will receive a commission of 6.0% of the gross proceeds raised in the Offering. The Agents will also receive broker warrants equal to 6.0% of the number of Units sold. Each broker warrant will entitle the Agents to purchase one share at the Offering Price for a period of 12 months following the closing date.
The proceeds of the financing will be used for repayment of a convertible note facility and for working capital purposes.
About Largo
Largo Resources is a Canadian natural resource development and exploration company with two advanced stage projects: the Maracas Vanadium-PGM deposit in Brazil and the Northern Dancer Tungsten-Molybdenum deposit in the Yukon. Largo also has a large (60,000 hectare) land position and prospective gold exploration properties in Ecuador. The company is listed on the TSX Venture Exchange under the symbol LGO.
For more information please refer to Largo's website: www.largoresources.com.
High priority drill targets identified from ground magnetic and IP surveys, lithological and petrographic studies
TORONTO, ONTARIO--(Marketwire - June 2, 2008) -
Largo Resources Ltd. (TSX VENTURE: LGO) announced today that a drill has been mobilized on the Maracas property to begin a 5,000-metre exploration drill program to test a number of high priority PGM targets. A total of 20 to 25 holes will be drilled. These holes were targeted based on the magnetic and Spectral Induced Polarization (IP) surveys completed in late 2007, lithogeochemical results from drill core sampling done across the property and some modeling and lithological and petrographic studies done by Dr. Reid Keays, an expert in platinum group element (PGE) deposits.
The PGE-rich Iron-Titanium-Vanadium oxide mineralization at Maracas has much higher Pt/Pd ratios than other magnetite rich systems such as those of the Platinova Reefs in the Skaergaard Intrusion (Greenland), Stella (South Africa) or Rincon del Tigre (Bolivia).
Drilling indicates that more sulphides are associated with the PGM mineralization and that copper and nickel are anomalous in the zones. Petrographic and analytical work by Dr. Keays has confirmed that PGM values are closely spatially related to sulphides and higher PGM grades tend to occur in sections with higher sulphide content. Ground geophysics surveys indicate that the zones extend across the property for eight kilometres of strike length.
Largo believes there is a strong possibility for a PGE-rich horizon to occur at a stratigraphic interval higher than that which the Gulcari A deposit is located. The field work completed to date has identified a number of high priority targets to be tested by this upcoming diamond drill program. Key targets are depicted in the map appended to the end of this new release.
Diamond Drill Results
Drilling results from five (5) regional exploration holes across the property that were completed in late 2007 have confirmed significant widths of PGM and V2O5 mineralization in four of five holes. These holes were targeted before completion of the IP work and studies by Dr. Keays were completed. The fifth hole failed to hit the target due to ground conditions. The target remains untested and will be part of this new program.
The results are summarized in Table 1 appended at the end of this news release.
Andy Campbell, P.Geo., Vice President, Exploration commented: "We now have a much better understanding of the relationship between the sulphides in the magnetite-rich layers and the PGM mineralization at Maracas. Further work is focussing on locating areas with greater sulphide content in stratigraphically higher parts of the intrusion as predicted by Dr. Keays model. These areas will be tested in the upcoming drill program. The Pt d ratio continues to be very high, enhancing the potential of discovering an economic PGM deposit in addition to our substantial vanadium resources."
Analytical work was carried out by SGS Minerals in Belo Horizonte, Brazil, an ISO 9001-2000 certified laboratory. Largo employs a systematic QA/QC program including standards, duplicates and blanks. Andy Campbell, P. Geo., Largo's Vice President of Exploration, is the Qualified Person responsible for the scientific and technical work for the program as defined under National Instrument 43-101 and has reviewed this release.
Largo is pleased to announce that it has granted 200,000 stock options to a director of the Company. The options shall be exercisable for $0.77 for a period of five years from the date of grant. The grant of options shall be subject to receiving all necessary regulatory approvals and the options shall vest immediately subject to the regulatory four month hold period.
About Largo
Largo Resources is a Canadian natural resource development and exploration company with two advanced stage projects: the Maracas Vanadium-PGM deposit in Brazil and the Northern Dancer Tungsten-Molybdenum deposit in the Yukon. The company is listed on the TSX Venture Exchange under the symbol LGO.
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Ob das nur rein durch die Ankündigung des Bohrprogramms geschieht????
keiner mehr investiert?
nach solchen ansiegen tümmeln sich doch sonst alle möglichen gespenster im thread
Meine Meinung, nicht maßgeblich . lag schon oft genug daneben.
Der Umsatz spricht eine andere Sprache.
Massive Umsatze in den letzen Handelstagen .Alleine am Freitag fast 10.000.000 Millionen......
Natürlich kannn es wieder mal abwärts gehen, aber derzeit in Can 1$.
ist da was im busch? kurs und volumen erwachen aus dem nichts!
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die letzten 30 Trades einsehen.
Und geht das noch höher oder müssen wir im Schluss auf die Produktion warten???
Hier schon mal DANKE an alle die dazu was schreiben!!!